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Prior to investment: Ensure human rights due diligence is undertaken as per UN Guiding Principles on Business and Human Rights (UNGPs) as a condition for investing and structure investments so as to maximize the ability to influence respect of human rights.

During investment: Monitor human rights performance of investments and engage with companies to encourage respecting communities’ rights as per the UNGPs. If the company is not receptive, increase pressure e.g. through collaboration with peers or divest.

Both prior to and during investment: Engage with companies or asset managers with specific questions on human rights and take steps to verify information; engage with governments, civil society, trade unions, communities, and others to encourage community-led best practices and renewable energy that respects human rights.

Investment in renewable energy projects has increased close to fivefold over the past 12 years, from $62 billion in 2004 to $287 billion in 2016. As technology costs continue to drop, investments in renewable energy are increasingly recognised as providing a competitive advantage. However, the way in which these projects are developed and implemented matters – both for local communities and for investors. There has been a rise in reports of renewable energy projects negatively affecting the communities where they operate including impacts on land, indigenous peoples, threats, intimidation, and even killings. This causes operational delays, legal costs and reputational risks, which are likely to translate in diminished financial returns for investors, as well as increased operational and capital expenditure...Investors can engage companies to mitigate risks and improve human rights practices. By doing so they reduce risk to their investments and to local communities, while contributing to a just transition to a low-carbon economy that benefits everyone.Investors should drive conversations with companies, particularly on achieving high standard of human rights due diligence and community engagement...

Multi-million renewable energy investments could be at risk from overlooking harms to local communities. Managing these impacts is key to secure a fast and fair transition to a low-carbon economy, and safeguard financial returns, according to analysis by Business & Human Rights Resource Centre, Transform Finance and Sonen Capital. A new briefing launched today sets out why investors in renewable energy should take action to ensure projects respect local communities’ rights and provides tools to use in their investment relationships.

The Paris Climate Agreement and the UN Sustainable Development Goals have clearly signalled the future of energy is in renewables. This shift has opened up a host of opportunities for investors, but also serious risks. Business & Human Rights Resource Centre has received 115 concerns of harms to local communities linked to renewable projects since 2005 including on land grabs, displacement of indigenous peoples, violence and killings. 94 out of those concerns were raised since 2010.

“The time is now for investors to take steps and engage with renewable energy companies and projects in their portfolios to ensure respect for human rights. The majority of renewable energy companies do not yet have rigorous human rights safeguards in place - only 5 out of 50 of wind and hydropower companies refer to respecting indigenous peoples’ internationally recognised right to free, prior & informed consent,” said Phil Bloomer, Executive Director of Business & Human Rights Resource Centre.

The briefing, launched at the Ceres conference today, shows that investors must be vigilant to the way in which renewable energy projects are implemented, as they can harm communities in which they operate. These harms can also result in costly delays, legal costs and reputational risks. Through case studies, examples and practical recommendations, the briefing helps investors shape a new energy system that considers human rights and community engagement as the cornerstone for sustainable energy development.

“As long-term investors, we believe that the analysis of human rights in the renewable energy context set forth in this briefing is fundamental. We need to foster more community engagement to ensure that the transition to renewable energy truly benefits communities and does not create undue risk for investors. This view of investment as management of financial, human and environmental capital underpins CalPERS’ beliefs,” said Anne Simpson, Investment Director, Sustainability, of the California Public Employees' Retirement System (CalPERS), with $300 billion assets under management.

With input from over 30 experts and investors including Principles for Responsible Investment and UNEP Finance Initiative, the briefing demonstrates how integrating human rights considerations early on in the decision-making process, while prioritizing building strong and equitable relationships based on engagement with affected communities, can reduce the likelihood of conflicts that undermine a project’s success. These practices also help ensure that all stakeholders benefit from the investment, from financial, environmental and social perspectives.

The briefing is intended for any investor holding or considering investments in renewable energy projects, whether through direct or indirect ownership.

Last year, a planned $150 million Kenyan wind park was cancelled after protests and land disputes, according to a report by the London-based Business & Human Rights Resource Centre and two investor group partners. Another wind farm in the Mexican state of Oaxaca, similarly, has been stalled for years after a dispute over access by local people to project land. Such conflicts, which are on the rise as countries rush to meet clean energy goals under the Paris Agreement on climate change, can result in losses for investors – and slowdowns in getting renewable energy online – unless investors take care to ensure communities and local rights are protected, the report said. "We see a very strong need for renewable energy to tackle climate change, but we want to make sure that the renewable energy sector and investors don't make the same mistakes as past energy (investors)" in things like coal and oil, said Eniko Horvath, a senior researcher with the Business & Human Rights Resource Centre...Currently only five of 50 wind and hydropower companies surveyed around the world appear to have a clear focus on respecting the rights of indigenous people and ensuring their projects have been given what is known as "free, prior and informed consent" by local people, said Phil Bloomer, the centre's executive director...some investors are becoming aware of the potential risks – including high legal costs and damage to reputation – when clean energy projects are slowed or cancelled as a result of protests. But they remain a minority..

[A new] study, by Business & Human Rights Resource Centre…documents how renewables firms, particularly in developing countries, are failing to meet international standards for engaging with the local communities where mainly wind and hydropower projects are being implemented. The report highlights cases of illegal land-grabbing, intimidation and violence, while the large majority of those featured in the research admitted to failing to meet basic rules of engagement around free, prior and informed consent (FPIC)...The report suggested that renewables projects are running into similar problems faced by the extractive industry because both involve the large scale use of land...These include operational delays, legal costs and reputational risks, which are likely to mean lower financial returns for investors, as well as increased operational and capital expenditure, the report noted...

Renewable energy projects are the primary weapon in the war on climate change, but that shouldn't exempt these projects in the developing world from United Nations' standards on human rights, argues a new [Business & Human Rights Resource Centre, Sonen Capital & Transform Finance] report...[During this] video interview with two of the co-authors, Andrea Armeni of Transform Finance and Meredith Benton, Armeni points out that when a wind or solar project is built... there may be a negative impact on a local community--which may or may not benefit much from the project...To ensure that the local community benefits from its participation in the project, the investors need to insist that the community be represented at the table from start to finish.

[At] the American Renewable Energy Institute's (AREI)...14th annual American Renewable Energy Day summit in Colorado...Equitable Origin's CEO, Soledad Mills...highlighted key insights from the Business and Human Rights Resource Centre's Investor Briefing on Renewable Energy Impacts on Communities that...emphasizes the role of investors in ensuring that the transition to a low-carbon economy does not negatively affect communities, workers and other vulnerable groups...Human rights risks for the renewables sector include Indigenous Peoples’ rights and the right to Free, Prior and Informed Consent (FPIC); labor rights; rights of women and children; and responsible supply chain management, among others...The briefing makes the case for why investors should integrate human rights considerations early on in the investment process to safeguard against potential financial, legal, reputational and operational risks...Eniko Horvath, a senior researcher with the Business & Human Rights Resource Centre, [said,] “As our future energy providers, the renewables sector has the opportunity to embed human rights at its core at a key moment to ensure a fast and fair transition to a truly clean source of energy.”

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